Organizational and Cultural clash at Fujitsu - Siemens

Table of contents

1) Introduction

2) How is organizational culture defined ?

3) National and organizational culture of western “ S i e m e n s AG ” meets Japanese “ F u j i t s u L t d. ”
3.1) Influence of national culture - Differences in managerial style
- Universalism versus Particularism
- Individualism versus Collectivism
- Neutral versus Affective relationship
- Specific versus Diffuse relationship
- Achievement versus Ascription
- Uncertainty Avoidance
- High and Low context
- Masculinity and Femininity
3.2) Organizational and corporate culture
3.3) The “Eiffel Tower” Siemens clashes with the “Family” Fujitsu
- “Eiffel Tower”: Corporate culture of Siemens
- “Family”: Corporate culture of Fujitsu

4) The”Family” and the “Eiffel Tower” in conflict

1) Introduction

In the last decades, the world leading enterprises have been faced with raising competition among themselves. To cope with these circumstances, many companies decided to merge or set up joint ventures to share costs and increase revenues.

As one example of joint ventures, Fujitsu and Siemens combined their computer divisions in October 1999 to go for the top in the computer market.

A short review from an article who was written in July 1999 and appeared at Yahoos business news website shows the kickoff of this joint venture.

“ Fujitsu Ltd. and Siemens AG have signed a memorandum of understanding to combine their European computer operations and established a 50-50 joint venture company called Fujitsu Siemens Computers Each company will have an equal number of board seats on the new company. Fujitsu involves his 1.600-man from Fujitsu Computers Europe Ltd. and Siemens its 8.000-man from the Siemens Computer System Division in the joint venture.”¹

Nearly one year later, in April 2000 another article appeared who provides a little more insight information about the Fujitsu Siemens joint venture and how it has developed.

“ Fujitsu Siemens, with no public explanation, has replaced the two vice presidents that have been running the joint venture since it was founded a year ago. The former head of Siemens Nixdorf IT Services Paul Stodden, now in charge of Fujitsu Siemens as president and CEO, replaced Fujitsu Siemens sales and marketing VP Winfred Hoffmann, a former Fujitsu manager, and product development VP Robert Hoog, who came from Siemens. The two had jointly run Fujitsu Siemens and it was not immediately known if they were leaving the company entirely”²

From this example we can assume that mergers, acquisitions and joint ventures often not run as smoothly as projected. It is estimated that more than half of all mergers and acquisitions prove financially unsuccessful.³

Providing an explanation, we have to look beyond the balance sheet and highlight the organizational culture.

2) How is Organizational Culture defined ?

Organizational culture is a set of values, feelings, attitudes and expectations which provide meaning, order and stability to members lives and influence their behavior.⁴ While values are considered a sufficient basis for action, in that values are what we act to keep, the essence of organizational culture is more deeply rooted. Culture is not merely a set of shared values, but a set of basic assumptions which operate in an often unconscious “taken for granted” fashion, as a powerful determinant of individual and group behavior. Culture has visibility and “feelability” of which one is termed the “culture shock”.

Organizational culture is “the way in which things get done within an organization”.

The cultural assumptions and beliefs of an organization are learnt by its members through socialization. ⁵

In order for an international operating company to succeed, employees must understand the wide spectrum of organizational and cultural differences by becoming sensitive in these respects to different cultures unlike their own.

3) National and organizational culture of western “ S i e m e n s AG“ meets Japanese “F u j i t s u Ltd.”

Before setting up a joint venture there is a stage of gathering available pre-joint venture information about the other party. Similar to a marriage where both persons run through a information gathering process before they decide to marry. At a beginning of a personal relationships, both partners normally focus on personal values, behavior and cultural background of each other neither than on the salary nor the amount of money the other part has.

Transferring this behavior to the Fujitsu Siemens joint venture, at least Siemens only focused on the material point of view, which includes cost savings, economy of scale and monetary belongings.

This behavior is often common among companies who decide to go for a long-term relationship, but more important instead is cultural awareness and sensitivity towards different “realities” and views of the world.

3.1) Influence of national culture - Differences in Managerial Style

Different national backgrounds create specific styles in managing people. In some cultures managers are expected to act like a guide or a moderator to lead a team to success but some cultures do not see a managers role like mentioned above. They expect precise answers and clear advises form their supervisors.

Towards the question: “ It is important for a manager to have at hand precise answers to most of the questions that his subordinates may raise about their work” , posed by the French researcher André Laurent, Japanese responded with yes nearly twice as often as their German colleagues did.⁶

- Universalism versus Particularism

In Japan, most managers are hired directly out of colleges and universities, after which they are put through an extensive training program. Soon after joining the company, most managers are involved in projects for which they are sometimes even loaned to other firms. The result is that these managers create a string of relationships not only within the corporation but on the outside as well.⁷

Universalism means essentially that what is true and good can be discovered, defined and applied everywhere. Particularism means that unique circumstances and relationships are more important considerations in determining what is right and good than abstract rules.⁸ Germans tend to be more universalistic than Japanese, who rely on relationships and have a leaning towards particularistic behavior.

- Individualism versus Collectivism

Does a person regard him or herself primarily as an individual or primarily as part of a group ? ⁹

Individualism pertains to societies in which ties between individuals are loose and where everyone is expected to look after his- or herself like in the western countries.

Whereas in Asian countries like Japan the relationship is more like a family relationship, with a heavier moral foundation. International management is seriously affected by both preferences within various countries. Negotiations, decision-making and motivation are the most critical areas.

- Neutral versus Affective relationships

In affective cultures, expressing emotions openly is more ”natural”, whereas more neutral cultures believe that emotion should be held in check because showing anger, delight or intensity in the workplace is considered as “unprofessional”. Conversely, affective cultures would probably regard their neutral colleagues as emotional dead or as hiding their true feelings.¹⁰

The Japanese culture is seen as the most “neutral” with a wide gap to next following British culture. Compared to the Japanese “neutral” behavior and the most “affective” acting Mexicans, the “moderate” Germans tend to be in the middle.

- Achievement versus ascription

How is status and power in a society determined ?

Status can be based either on what someone does, or on what someone is. Cultures differ in the way the have solved this dilemma.¹¹ Regarding to the Fujitsu Siemens joint venture, the Germans rely more on achievement in contrast to the ascription oriented Japanese, but both cultures respects personal achievements as well as ascription.

Related to this dimension the power distribution between boss and subordinate is an important issue.

The Western concept of power is to have the ability to make and carry out significant decisions and to implement these decisions, even if it is made by a single individual. The Asian concept of power is characterized by a desire to avoid decision making. The social order is seen as designed for those in power, in other words, status rather than freedom of choice is the primary manifestation of power.

While individuals in Germany often demand the freedom of decision making, the Japanese mainly decide focus on group decision formed by the “ringi-process”.¹² Which means that a decision is made in consensus and all members of a group have to agreed to the decision.

- High and Low context

Is dimension can be defined like the way in which people communicate and especially the circumstances surrounding that communication.¹³

When individuals have considerable knowledge and experience in common, their communication is generally highly contexted which can be described like what individuals choose not to put into words is essential to understand the actual message intended.¹⁴ Japanese tend to have a extremely high context culture while the Germans mostly prefer low contexting.¹⁵

- Uncertainty Avoidance

Uncertainty avoidance an be described like the degree to which people can tolerate ambiguity. Gudykunst ( 1983 ) has demonstrated a positive correlation between high context cultures and high uncertainty avoidance. A nation with high uncertainty avoidance, like the Japanese, adherence to rules, emphasized the importance of employment stability variables, and demonstrated high levels of anxiety, job stress, and worry about the future.¹⁶ Cultures low in uncertainty avoidance exhibited less adherence to rules and do not stress their worries that much.

- Masculinity and femininity

Masculine orientated cultures ( corporate cultures ) act paternalistic by providing what is needed but giving no responsibility or freedom of choice. On the other hand, femininity is characterized by consensus seeking and more concerned with interpersonal relationships. Japanese culture was identified by Hofstede as strongly masculine whereas the German culture, to a certain extend, nowadays tend to be slightly feminine.

3.2) Organizational and corporate culture

The culture of an organization might be simply described by “ how we do things around here”.¹⁷ Every organization is different and has different expectations of its employees.

In case of the Fujitsu Siemens joint venture two out of four described corporate cultures have to be mentioned.

3.3) The “Eiffel Tower” Siemens clashes with the “Family” Fujitsu

- “ Eiffel Tower “: The corporate culture of Siemens

The boss in the Eiffel Tower is only incidentally a person. Essentially he or she is a role. It follows that authority stems from occupancy of the role. Relationships are specific and status is ascribed and stays behind the office. Status in a Eiffel Tower is ascribed to the role. The way of thinking and learning means accumulating the skills necessary to fit a role and hopefully the additional skills to qualify for a higher position. For employees in the Eiffel Tower, the family culture is arbitrary, irrational, conspiratorial, cozy and corrupt.¹⁸

- “ Family”: The corporate culture of Fujitsu

The family culture is at the same time personal, with close face-to-face relationships, but also hierarchical, in the sense of “father” with his authority and experience exceeding those to his “children”. The result is a power-oriented corporate culture. One major business virtue is Tatemae, which means to treat each other in a polite and indirect way.¹⁹ The counterpart is Honne, which symbolizes direct and really honest treatment. Honne is only used in deep rooted relationships like married couples keep up and even there it is often not common.²⁰

Therefore family-style corporate cultures often use high context to sheer information and cultural content. The higher the commitment in these family culture the higher the context and the harder it is for outsiders to get to know how to behave appropriately.²¹

3.4) The “Family” and the “Eiffel Tower” in conflict

In case of the Fujitsu Siemens joint venture, the sophisticated Eiffel Tower culture of Siemens meets the sophisticated family culture of Fujitsu. Possibly conflict potential could appear by instead of following set procedures and having objective benchmarks, which employees agree to conform to in an Eiffel Tower culture. The family culture is forever shifting goal posts or suspending competitive play altogether.²²

Combined with different negotiation styles ( direct - indirect ) it could become difficult to communicate and understand each others point of view.

In hopes that management becomes culturally educated and prepared to conduct business both companies should supply informal and formal education incentive programs. However, if a business is able to incorporate its cultural ideas and concepts, it has met common ground and both cultures will be respected. Then it would be less likely for differences in culture to cause a serious problem in the joint venture.

Words: 1998

5) Questions asked to measure intercultural competence

Managing intercultural differences is essential for the success of a joint venture. The

following three questions will help the employees to be aware of cultural differences and different cooperate cultures.

Question 1:

Who do you, as an employee of the joint venture, see the other party’s behavior concerning to communication ?

With this question the differences in communicational style ( direct - indirect ) will come to surface.

Question 2:

By getting the information you need for doing your job, do you rely more on interpersonal relationships or on the formal hierarchical way ?

The differences between universalistic and particularistic behavior will come to light.

Question 3:

Beside the cultural differences, the corporate culture is also an important factor. Where do you see the advantages and disadvantages of the other company’s corporate culture ? Employees will get aware of the different corporate cultures and the possibility of combining the advantages of both corporate cultures.

6) Bibliography

Books:

Nancy J. Adler, Organizational Behavior, International Thomson Publishing, Canada 1997

Cartwirght Sue & Cooper, Cary L., Managing Mergers, Acquisitions & Strategic Alliances - Integrating People and Cultures, Butterworth-Heinemann 1996

Dülfe Eberhard, Personelle Aspekte im Internationalen Management, Erich Schmidt Verlag 1995

David A. Victor, International Business Communication, Harper Collins Publishers 1992

Deborah Borishoff & David A. Victor, Conflict Management, Prentice-Hall 1989

Supplementary sources:

Hale Niko, IBC1-Script & IBC2-Script, Department of International Business, University of Furtwangen, 1999

Thomas E. Maher, International Week - Entry & Exit Strategies, 2000

WWW:

www.knowledgestor.com, Fujitsu - Siemens articles, 1999 / 2000 www.coshe.com, W. Carl Kester, Corporate Governance, 2000

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¹,² www.knowledgstor.com

³, ⁴, ⁵ Cartwright Sue & Cooper L. Page 1, Page 60 - 61

⁶ Niko Hale ( 1999) MCD - IBC 2, Page 18

⁷ Corporate Governance, W. Carl Kester, www.coshe.com

⁸ Niko Hale ( 1999) MCD - IBC 2, Page 20

⁹ Niko Hale ( 1999) MCD - IBC 2, Page 26

¹⁰ Niko Hale ( 1999) MCD - IBC 2, Page 22

¹¹ Niko Hale ( 1999) MCD - IBC 2, Page 25

¹² Trompenaars, Fons (1994), P. 57 -58

¹³ Borishoff & Victor, Conflict Management P. 140

¹⁴ David A. Victor, International Business communication P. 143

¹⁵ David A. Victor, International Business communication, Rosch & Segler graph of relative rank-ordering of context P. 143

¹⁶ David A. Victor, International Business communication P. 153

¹⁷ Niko Hale ( 2000) Organizational Cultures - IBC 3, Page 9

¹⁸,²¹ Niko Hale ( 2000) Organizational Cultures - IBC 3, Page 19 ff.

¹⁹,²⁰ Thomas E. Maher ( 2000), Entry & Exit Strategies

²² Niko Hale ( 2000) Organizational Cultures - IBC 3, Page 19 ff.